Pulling fraud out of the shadows

of organisations globally said they’ve been a victim of fraud and economic crime – up from 36%

64%

of respondents said losses due directly to their most disruptive fraud could reach US$1 million

52%

of all frauds are perpetrated by people inside the organisation

31%

of respondents that suffered fraud indicated they experienced cybercrime

Staying vigilant – or turning a blind eye?

PwC’s 2018 Global Economic Crime and Fraud Survey finds that 49% of global organisations say they’ve experienced economic crime in the past two years. But what about the other 51%? Have they avoided falling victim – or simply don’t know about it? Since fraud hides in the shadows, one of the most powerful weapons in a fraudster’s armoury is a lack of awareness within organisations. It’s time for all businesses to recognise the true nature of the threat: not as just a nuisance or cost of doing business, but a shadow industry with tentacles in every country, sector and function.

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Four steps to fight fraud

Identify your blind spots

This year, 49% of respondents said their companies had suffered fraud, up from 36% in 2016 – a rise driven by rising global awareness of fraud, a more robust response rate, and greater clarity around what ‘fraud’ actually means. But every organisation – no matter how vigilant – is vulnerable to blind spots, which usually become apparent only after an incident. Throwing light onto those blind spots before anything happens can open up opportunities for big improvements in your fraud-fighting efforts.

Be ready - fraud can happen anywhere

The public’s tolerance for corporate and personal misbehaviour is declining – fast. The effects include heightened risks when incidences of fraud spill into view, and a heightened need for organisations to prevent it before it takes root. But, worryingly, only 54% of organisations globally said they’ve conducted any kind of fraud or economic crime risk assessment. Rather than playing catch-up, it’s time for all businesses to adopt a dynamic and proactive approach to that gets them ahead of the fraudsters.

Find the technology sweet spot

When it comes to fraud, technology is a double-edged sword, potentially acting both as a threat and protector: 26% of respondents said they expected to experience a cyber-attack in the next two years. On the fraud defence front, organisations can now call on a wealth of innovative technologies like predictive analytics, machine learning and other artificial intelligence techniques. The good news is they’re starting to use them – but there’s still further to go to harness their full potential.

Invest in your people

Faced with rising fraud risks, many organisations decide to pour more money into technology. Yet when it comes to fighting fraud – especially internal fraud – technology investments can reach a point of diminishing returns. Fraud is the product of a complex mix of conditions and motivations, only some of which can be tackled by machines. When it comes to blocking that ‘last mile’ to fraud, the returns from people initiatives are likely to far exceed those from investing in another piece of technology.